LAM14020 - Finance Act 2012 Transitional provisions: Overview of the transitional adjustments: FA12/SCH17
The basis of calculation for the transitional adjustments were agreed as part of the transitional year 2013 tax returns. Specific guidance on the basis for these adjustments was published by HMRC. There should be no further requirement to review these calculations and therefore this chapter does not cover the detail of how to calculate the initial adjustments.
The main provisions set out in FA12/SCH17 are in the table below.
| Provision | Detail |
|---|---|
| Deemed receipts and expenses FA12/SCH17/PARA1-20 | Comparison of the 2012 balance sheet per the financial statements with the 2012 periodical return and specifies how the differences should be treated on transition LAM14030 |
| Election for ‘old’ BLAGAB protection business FA12/SCH17/PARA21 | Election to treat ‘old’ BLAGAB protection business as non-BLAGAB under the new rules - a simplification measure for companies only writing protection business LAM14040 |
| Amounts previously taken into account (DAC) FA12/SCH17/PARA22 | Provisions to ensure that amounts previously taken into account for tax, principally deferred acquisition costs and deferred income reserves, are only taxed or deducted once LAM14050 |
| Intangible fixed assets FA212/SCH17/PARA24 | Transition required as I-E companies previously excluded from intangible assets provisions of CTA09 LAM14060 |
| Assets held for purposes of long-term business FA12/SCH17/PARA25-28 | Rules to facilitate the allocation of chargeable assets between BLAGAB and non-BLAGAB and the adjustment of separate pools base costs LAM14070 |
| Carry forward of trade profits and management expenses FA12/SCH17/PARA29-34 | Provisions dealing with unused losses at 31 December 2012 which could be carried forward and used against profits in the new regime LAM14080 |
| Assets of the Shareholder Fund FA12/SCH17/PARA35 | With the disappearance of the concept of the ‘Shareholder Fund’ for tax purposes rules to govern the grandfathering of existing assets LAM14090 |
In addition there is a general transition provision in FA12/SCH17/PARA36 which ensures that existing legislation continues to apply with any necessary modifications, as appropriate.
There are special provisions relating to transitional adjustments on transfers of business which are explained at LAM13040.
LAM14030-LAM14080 summarise the main provisions and explain the expected impact on corporation tax returns once the initial adjustments had been made in 2013, i.e. from 2014 onwards.